South Africa will temporarily reduce its fuel levy for one month in an effort to limit further increases in fuel prices in April, the government said on Tuesday.
The move comes after trade unions and business groups pressured authorities to act to cushion the impact of the ongoing Iran war, Reuters reported.
In a joint statement, the finance and petroleum ministries said the government would recover the 6 billion rand ($350.69 million) in tax revenue forgone through other mechanisms.
Officials added that a broader package of measures is being prepared to support households and key sectors of the economy. Despite the levy cut, the regulated petrol price is still expected to rise by about 15% in April, while wholesale diesel could increase by 40%.
For April, the general fuel levy will be lowered by 3 rand, bringing it to 1.10 rand per litre for petrol and 0.93 rand per litre for diesel.
Finance Minister Enoch Godongwana told reporters the government will continue to monitor developments in the Middle East and may consider additional fuel levy relief in May and June if the conflict persists. “I don’t think it can be sustained beyond June,” he said.
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This one-month levy cut mirrors a similar measure implemented in 2022 at the start of Russia’s war in Ukraine, when a 1.5 rand per litre reduction remained in place for several months before being gradually withdrawn.
South Africa’s central bank recently warned of inflationary risks from rising fuel costs, noting that fuel inflation could exceed 18% in the second quarter.
The risk-sensitive rand has fallen nearly 7% against the dollar since U.S. and Israeli strikes on Iran began in late February, further heightening inflationary pressures.
The country imports most of its petroleum products, leaving it vulnerable to global energy price swings. South Africa adjusts fuel prices monthly using a formula that considers global crude oil prices, exchange rates, and local taxes such as the fuel levy, with price changes taking effect on the first Wednesday of each month.
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Image Credit: Polity
